Zurich / CH. (aag) Swiss-Irish Aryzta AG listens to and respects the views of all shareholders and is committed to shareholder engagement. However, the Board of Directors rejects the most recent statement by Cobas Asset Management SGIIC, S.A. in connection with its alternative proposed capital raise and advises shareholders to disregard the Cobas proposal. The Board of Directors has thoroughly reviewed the capital position of the Company. It has consistently taken the view that an equity raise of EUR 800 million is appropriate to address the needs of the Company and secured a corresponding underwriting on 10 September 2018. This has been the basis for all subsequent communications of the Company.
The Board of Directors, together with its independent financial advisor, Rothschild + Co., previously reviewed the Cobas proposal in detail, including a review of the funding and capital structure implications of that proposal. The Board of Directors unanimously believes that that proposal is inadequate and, because it is not underwritten presents significant execution risk for shareholders.
The Cobas proposal carries significant timing and execution risk and there is no certainty it could be implemented.
In contrast, if approved by shareholders at the AGM, the Board of Directors’ proposed EUR 800 million capital raise, which is fully underwritten, is expected to be implemented within 3 weeks of the AGM, thereby providing the Group, its shareholders and all other stakeholders with the necessary confidence in the financial position of the Group.
Capital Available
The Board believes the Cobas proposal for a EUR 400 million rights issue is inadequate, adds significant commercial and financial uncertainty and will not adequately address the Company’s needs. The Board also believes the capital raise needs to be a one-time transaction to repair the balance sheet. Trying to fill the gap with unidentified disposals, raising of further debt and/or a staged capital raise, as suggested by Cobas, would add further management distraction and increase uncertainty, with no guarantee of garnering shareholder support now or in the future.
Further, the statement by Cobas regarding the Company’s total cash position is inaccurate as it has selectively chosen the total cash position of the Company as at 31 July 2018. It does not take into account the Company’s overdrafts and therefore overstates the Group’s cash position by more than EUR 170 million.
Shareholder Consultation
Aryzta has engaged in extensive consultation with its shareholders since the initial announcement of the planned capital raise on 13 August 2018. Aryzta rejects the Cobas statement about a lack of shareholder engagement and highlights that it has, since 13 August 2018, held 12 in person meetings or calls with Cobas not including numerous written and email correspondence between both parties.
Proposed Alternative Timetable
The timetable suggested by Cobas in its announcement of 23 October 2018 is flawed and is not feasible for a number of legal and factual reasons. These include, among other matters, the requirement to respect the rights of other shareholders under the Company’s Articles of Association to propose agenda items (including a proposal for an alternative capital increase), the requirement to undertake the preparation and review of a revised working capital statement required by EU prospectus law, and the requirement to include externally reviewed Q1 FY2019 financials in the prospectus. As a result, Aryzta believes that the Cobas proposal, even if approved by shareholders in late 2018, and assuming it could be underwritten (of which there is no certainty), could only be implemented in early 2019.
Duty of Care
The Board of Directors determined the proposed EUR 800 million capital increase in exercise of its duty of care and loyalty to the Company. Consequently, the proposal by the Aryzta Board has to pass an enhanced qualitative test. The Board of Directors unanimously recommends that shareholders disregard Cobas’ proposal and vote in favour of the capital increase resolution at the AGM in addition to all other resolutions being proposed as they intend to do in respect of their own shareholdings.
